|
This judgment is subject to final editorial corrections approved by the court and/or redaction pursuant to the publisher's duty in compliance with the law, for publication in LawNet and/or the Singapore Law Reports. |
Gate Gourmet Korea Co, Ltd and others
v
Asiana Airlines, Inc
[2023] SGHC(I) 23
Singapore International Commercial Court - Originating Application No 14 of 2023
Simon Thorley IJ
15 September 2023, 10 November 2023
1 December 2023 Judgment reserved.
Simon Thorley IJ:
Introduction
1 This is the latest round in the long running dispute between the parties surrounding four agreements relating to the provision of catering facilities to Asiana Airlines, Inc ("Asiana"), the respondent to these applications.
Background
The Parties
2 Asiana is a Korean company engaged in the business of air travel and is part of the Kumho Asiana group of companies (the "Kumho Asiana Group").
3 There are four applicants (the "Applicants"): the 1st Applicant, Gate Gourmet Korea Co Ltd ("GGK"), is a Korean company engaged in the business of providing catering and other services to the airline industry. It is a joint venture between the 2nd Applicant, Gate Gourmet Switzerland GMBH ("GGS") and Asiana. GGK's main customer is Asiana.
[1]GGS is a Swiss company which provides in-flight catering and other airline handling services.
[2]
4 There are two applications before the court, the first, initially commenced in the General Division of the High Court (the "GDHC"), HC/OA 656/2023 ("OA 656"), on 28 June 2023 and subsequently transferred to this court as SIC/OA 14/2023 ("SIC 14"), seeks declaratory and anti-suit relief in relation to two civil suits commenced in the Courts of South Korea by Asiana against one or more of the Applicants. The second was a summons filed by the Applicants again in the GDHC (HC/SUM 1931/2023) seeking interim anti-suit relief pending judgment in OA 656, which has also been transferred to the SICC. The parties have however come to an agreement as to how to hold the ring pending delivery of this judgment and I need therefore say no more about this summons.
5 The first of the Korean cases is Case No. 2022 Gahap 51122 brought before the Incheon District Court ("Korean CA Proceedings") against GGK
[3]and the second is Case No. 2022 Gahap 109880 brought before the Seoul Southern District Court ("Korean Compensation Proceedings") against GGS, Mr Schmitz and Mr Rossinyol (collectively, the "Directors").
[4] ("Article 103") on the basis that the coupling of the BWA with the CA was a breach of trust by Chairman Park and that GGK actively participated in that breach by entering the CA.
[22]Gahap 51122 dated 14 March 2022 at Section III.2, ABOD Vol 5 Tab 6 (1st Affidavit of Kim Se Joong dated 14 July 2023) at p 77.
27 On 13 October 2022 Asiana commenced the Korean Compensation Proceedings (see above at [5]) against GGS and the Directors before the Seoul Southern District Court (Case No, 2022 Gahap 109880) seeking damages on the basis that:
[23](a) Chairman Park induced Asiana to enter into a "package deal" with gategroup as a consequence of which: (i) GGK became Asiana's exclusive airline catering service provider; (ii) Kumho Buslines received at least KWR 160 billion; and (iii) Asiana received inadequate consideration as a result;
(b) each of the contracts comprising the joint venture, i.e. the JVA, Catering Agreement, BWA and Management Services Agreement, constituted part of the "package deal"
(c) Chairman Park's action were a breach of trust against Asiana;
(d) GGS, Mr Schmitz and Mr Rossinyol actively participated in Chairman Park's breach of trust by entering into and/or concluding the JVA, for which they are jointly and severally liable pursuant to Arts 35, 756 and 760 of the Korean Civil Code.
28 It is these two proceedings that are the subject of this application for anti-suit injunctions.
The Applicable Legal Principles
Anti-Suit Injunctions
29 The fundamental principles governing the grant of anti-suit injunctions are not in dispute. Asiana directed my attention to the recent decision of the Court of Appeal in
VEW v VEV [2022] 2 SLR 380 ("
VEW v VEV ")
at [42]-[43], where Andrew Phang Boon Leong JCA (as he then was) said this:
42 An ASI is an order of the court compelling the party subject to the order to refrain from instituting or continuing with proceedings abroad (see the High Court decision of
PT Sandipala Arthaputra v
STMicroelectronics Asia Pacific Pte Ltd and others [2015] 5 SLR 873 ("
PT Sandipala ") at [71]). The general principles governing the issuance of ASIs are well established in Singapore. First, the jurisdiction is to be exercised when the "ends of justice" require it; second, where the court decides to grant an injunction restraining proceedings in a foreign court, its order is directed not against the foreign court but against the parties so proceeding or threatening to proceed; third, an injunction will only be issued restraining a party who is amenable to the jurisdiction of the court; fourth, since such an order indirectly affects the foreign court, the jurisdiction is one which must be exercised with caution (see the decision of this court in
Sun Travels & Tours Pvt Ltd v Hilton
International Manage
(Maldives) Pvt Ltd [2019] 1 SLR 732 ("
Sun Travels ") at [65]).
43 This court has also identified five factors (as stated in
Lakshmi
([18]
supra ) at [50]) that have to be considered when deciding whether to grant an ASI (see the decisions of this court in
VKC v VJZ and anothe
r [2021] 2 SLR 753 ("
VKC ") at [16]-[20]) and
Sun Travels at [66]):
(a) whether the defendant is amenable to the jurisdiction of the Singapore court;
(b) whether Singapore is the natural forum for resolution of the dispute between the parties;
(c) whether the foreign proceedings would be vexatious or oppressive to the plaintiff if allowed to continue;
(d) whether the ASI would cause any injustice to the defendant by depriving the defendant of legitimate juridical advantages sought in the foreign proceedings; and
(e) whether the institution of foreign proceedings was or would be in breach of any agreement between the parties.
Although these factors are to be considered in the round, a breach of an agreement has been regarded as a separate basis on which an ASI may be granted; one that is distinct from vexatious or oppressive conduct (see
Sun
Travels at [67]).
30 For their part, the Applicants accurately summarised the principles in their written submissions:
[24]54 The Court has the power to grant interim and permanent anti-suit injunctions pursuant to s 4(10) of the Civil Law Act 1909 78 and s 18(2) (read with paragraph 14 of the First Schedule) of the Supreme Court of Judicature Act 1969 respectively:
Hilton International Manage (Maldives) Pvt Ltd v Sun Travels & Tours Pvt Ltd [2018] SGHC 56 ("
Hilton ") at [42]-[43].
55 An anti-suit injunction is directed not against the foreign court but against the party so proceeding or threatening to proceed:
Baker, Michael A (executor of the estate of Chantal Burnison, deceased) v BCS Business Consulting Services Pte Ltd [2022] 3 SLR 103 ("Baker') at [45(c)].
56 As noted by the Court of Appeal in
Sun Travels & Tours Pvt Ltd v Hilton International Manage (Maldives) Pvt Ltd [2019] 1 SLR 732 ("Sun Travels") at [67] there are two grounds for the grant of an anti-suit injunction:
(a) where the institution of foreign proceedings is in breach of any agreement between the parties; and
(b) where the foreign proceedings would be vexatious or oppressive to the applicant if allowed to continue.
57 The former category includes cases involving the breach of an arbitration or an exclusive jurisdiction clause:
Maldives Airports Co Ltd v GMR Male International Airport Pte Ltd [2013] 2 SLR 449 at [42].
31 In the circumstances of this case, it is appropriate to have in mind the following observations of Steven Chong JA in
Sun Travels & Tours Pvt Ltd v Hilton International Manage (Maldives) Pvt Ltd [2019] 1 SLR 732 ("
Sun Travels ") at [67]-[68]:
67
Although the factors are to be considered in the round, a breach of an
agreement has been regarded as a separate basis on which an anti-suit injunction may be granted; one that is distinct from vexatious or oppressive conduct:
UBS AG v Telesto Investments Ltd [2011] 4 SLR 503 ("
Telesto Investments ") at [111];
BC Andaman Co Ltd v Xie Ning Yun [2017] 4 SLR 1232 ("
BC Andaman ") at [53];
Lakshmi Anil Salgaocar v Jhaveri Darsan Jitendra [2018] SGHC 90 at [15];
Fentiman at para 16.39. This was also the view that the Judge took at [58] of her Judgment ([41]
supra ).
68
In cases involving an arbitration agreement or an exclusive
jurisdiction clause, it would suffice to show that there was a breach of such an agreement, and anti-suit relief would ordinarily be granted unless there are strong reasons not to :
Donohue v Armco Inc [2002] 1 All ER 749 ("
Donohue "),
per Lord Bingham at [24];
Morgan Stanley Asia (Singapore)
Pte v Hong Leong Finance Ltd [2013] 3 SLR 409 ("
Morgan Stanley ") at [29].
There will be no need to adduce additional evidence of unconscionable conduct in such cases. Crucially, however, this approach is subject to an important caveat: there is no requirement for the court to feel any diffidence in granting an anti-suit injunction, "
provided that it is sought promptly and before the foreign
proceedings are too far advanced " [emphasis added]:
Aggeliki Charis Compania Maritima SA v Pagnan SpA
(The "Angelic Grace") [1995] 1 Lloyd's Rep 87 ("
The Angelic Grace ") at 96. In the same vein, Lord Bingham in
Donohue at [24] had also held that "a party may lose his claim to equitable relief by dilatoriness or other unconscionable conduct". The issue of delay and how it relates to comity are key to the determination of this appeal and we turn now to.
[emphasis in italics in original; emphasis in underlining added]
32 Relying upon the reasoning of Quentin Loh J (as he then was) in [28]-[34] of
Hai Jiang 1401 Pte Ltd v Singapore Technologies Marine Ltd [2020] 4 SLR 1014 ("
Hai Jiang "),
[25]the Applicants asserted that that the court's power to grant an anti-suit injunction was the flip side of the coin of the court's power to stay domestic proceedings under s 6 of the Arbitration Act 2001 (2020 Rev Ed) and that, accordingly, the court should apply a
prima facie test in order to determine whether there is a valid and binding arbitration agreement which has been breached.
33 Counsel for Asiana questioned whether this reasoning was supportable and invited me to consider the question afresh. I decline to do so for two reasons. First, I would not lightly depart from the reasoning of a fellow judge without full argument and I have not had this in this case. Secondly, with respect, on the basis of the arguments I have heard, I agree with Loh J's reasoning.
The Effect of Delay
34 The parties also addressed me on the question of delay and the circumstances in which an otherwise appropriate application for an anti-suit injunction should be refused on the basis of delay.
Sun Travel
s was such a case but with fairly extreme facts as the proceedings in the Maldives had not only been commenced but had resulted in a substantive judgment before the application for an anti-suit injunction had been made.
35 However the court in
Sun Travel
s considered the relationship between delay and comity generally in [69]-[80] and concluded in [81]-[84]:
81 In our judgment, comity considerations are relevant when there is delay in bringing an application for anti-suit relief, and this is true even if the proceedings involve an exclusive jurisdiction clause or an arbitration agreement (as was the case in
Ecobank and
Sea Powerful ). We set out two other propositions that are relevant to this appeal.
82
First, the longer the delay and the more advanced the foreign court
proceedings become, the stronger the considerations of comity would be . It was observed in
Ecobank that "the longer an action continues without any attempt to restrain it, the less likely a court is to grant an injunction and considerations of comity have greater force", as more time, effort and expense will be wasted by the abandonment of proceedings which compliance with an anti-suit injunction would bring about (at [133]). This court in
Beckkett Pte Ltd v Deutsche Bank AG [2011] 2 SLR 96 at [24] had also observed that "considerations of comity grow in importance the longer the foreign suit in question has continued, and the more the parties and the foreign court have engaged in its conduct and management".
83
While the length of delay is relevant, what is of greater importance is
the extent to which the delay has allowed foreign proceedings to have progressed :
Niagara Maritime SA v Tianjin Iron & Steel Group Company
Limited [2011] EWHC 3035 (Comm) at [22], citing Thomas Raphael,
The
Anti-Suit Injunction (Oxford University Press, 2008) ("
Raphael ") at para 8.11. Where a foreign judgment has already been delivered as a result of delay, a host of different considerations come into play, and for reasons expounded on below (see [97] and [98]), we are of the view that exceptional circumstances must be shown
in addition to the usual requirements for anti-suit relief.
84
The second proposition is that delay cannot be justified on
the basis that jurisdictional objections are being raised in the foreign court . In
The
Angelic Grace ([68]
supra ), it was contended that the proper approach would have been to defer any application for an injunction until "something ha[d] gone wrong", such as when the foreign court accepted jurisdiction (at 95). Leggatt LJ rejected this approach, and found that this could be patronising and would achieve the "reverse of comity": "I can think of nothing more patronising than for the English Court to adopt the attitude that if the Italian Court declines jurisdiction, that would meet with the approval of the English Court, whereas if the Italian Court assumed jurisdiction, the English Court would then consider whether at that stage to intervene by injunction. That would be not only invidious but the reverse of comity".
[emphasis added]
36 Cases where proceedings in the foreign jurisdiction have been the subject of a substantive judgment are therefore an extreme case. In cases where proceedings in a foreign jurisdiction have been commenced and have proceeded some way down the road to resolution, whether any delay in seeking anti-suit relief will serve to prevent the granting of such an injunction is a multi-faceted question underlying the exercise of the court's discretion to grant the injunction sought. Each case will turn on its own facts. In the case of an alleged breach of an arbitration agreement, the exercise of the discretion involves drawing a balance between the
prima facie right of a party to an arbitration agreement to insist on its right to enforce that agreement and on the duty on such an applicant to act with due diligence to enforce that right. Not every delay will be fatal-the answer lies in assessing the degree of the delay, what has happened during the period of the delay, the state of the foreign proceedings as a result of the delay and the underlying effect on comity in order to reach a conclusion as to whether the applicant has forfeited its right to compel litigation in the arbitral forum.
Non-Contractual Anti-Suit Injunctions - Vexation and Oppression
37 In the case where the parties to the foreign proceedings are also parties to the arbitration agreement and it is shown that the bringing of the foreign proceedings constitutes a breach of the agreement, then, subject to delay,
prima facie an anti-suit injunction will be granted.
38 Where the sole defendant in the foreign proceedings is not a party to the arbitration agreement, the question of whether it would be vexatious or oppressive to the defendant if those proceedings were permitted to continue arises. The first four of the factors in [43] of the judgment in
VEW v VEV (see above at [29]) will have to be addressed.
39 The courts have however had to consider cases where the defendants to the foreign proceedings include parties, some of whom are parties to the arbitration agreement and some who are not, as well as cases where a non-party is a defendant in the foreign proceedings and arbitration proceedings are brought against a person who is a party to the arbitration agreement where the same issues arise.
40 Whilst each case must turn on its own facts, guidance can be obtained from the reasoning in earlier cases. As Quentin Loh J (as he then was) put it in
BC And
aman Co Ltd and others v Xie Ning Yun and another [2017] SGHC 64 at [104] ("
Andaman "):
[26]104 Since an anti-suit injunction is granted to meet the ends of justice, the interests of both parties must be considered. Even if the bringing of the foreign proceedings is
prima facie vexatious or oppressive, an anti-suit injunction will not be granted if it would nevertheless be unjust to enjoin the respondent from pursuing the foreign proceedings. This involves balancing the injustice to the applicant of denying the anti-suit injunction against the injustice to the respondent of granting the anti-suit injunction. All relevant factors must be considered, including but not limited to the natural and proper forum for the dispute to be heard:
Koh Kay Yew v Inno-Pacific Holdings Ltd [1997] 2 SLR(R) 148 at [19].
41 The question of the approach where both parties and non-parties were involved was considered by Lord Scott in the House of Lords in England in
Donohue
v Armco Inc [2001] UKHL 64 ("
Donohue ") and cited at length in
Clearlake Shipping Pte Ltd and Gunvor Singapore Pte Ltd v Xiang Da Marine Pte Ltd [2019] EWHC 284 (Comm) ("
Clearlake ") at [21].
[27]42 Lord Scott was considering the possibility of an anti-suit injunction being granted against a non-party to the arbitration agreement but who was alleged in the foreign proceedings to be liable as a joint tortfeasor with a person who was a party. The arbitration clause in that case was of similar scope to that in the CA Arbitration Agreement and the JVA Arbitration Agreement (see [8] above). At [60]-[62] of
Donohue Lord Scott said this:
60. There is a point of construction of the exclusive jurisdiction clause that it is convenient to deal with at this point.
It is accepted that the clause is not restricted to contractual claims. A claim for damages for, for example, fraudulent misrepresentation inducing an agreement containing an exclusive jurisdiction clause in the same form as that with which this case is concerned would, as a matter of ordinary language, be a claim in tort that arose "out of or in connection with" the agreement. If the alleged fraudulent misrepresentation had been made by two individuals jointly, of whom one was and the other was not a party to the agreement, the claim would still be of the same character, although only the party to the agreement would be entitled to the benefit of the exclusive jurisdiction clause.
The commencement of the claim against the two alleged tortfeasors elsewhere than in England would represent a breach of the clause. The defendant tortfeasor who was a party to the agreement would, absent strong reasons to the contrary, be entitled to an injunction restraining the continuance of the foreign proceedings. He would be entitled to an injunction restraining the continuance of the proceedings not only against himself but also against his co-defendant. The exclusive jurisdiction clause is expressed to cover "
any dispute
which may arise out of or in connection with" the agreement. It is not limited to "any claim against" the party to the agreement. To give the clause that limited construction would very substantially reduce the protection afforded by the clause to the party to the agreement. The non-party, if he remained alone as a defendant in the foreign proceedings, would be entitled to claim from his co-tortfeasor a contribution to any damages awarded. He could join the co-tortfeasor, the party entitled to the protection of the exclusive jurisdiction clause, in third party proceedings for that purpose. The position would be no different if the claim were to be commenced in the foreign court with only the tortfeasor who was not a party to the exclusive jurisdiction clause as a defendant. He would be able, and well advised, to commence third party proceedings against his co-tortfeasor, the party to the exclusive jurisdiction clause.
61.
In my opinion, an exclusive jurisdiction clause in the wide terms of that with which this case is concerned is broken if any proceedings within the scope of the clause are commenced in a foreign jurisdiction, whether or not the person entitled to the protection of the clause is joined as defendant to the proceedings. An injunction restraining the continuance of the proceedings would not, of course, be granted unless the party seeking the injunction, being someone entitled to the benefit of the clause, had a sufficient interest in obtaining the injunction. It would, I think, be necessary for him to show that the claim being prosecuted in the foreign jurisdiction was one which, if it succeeded, would involve him in some consequential liability. It would certainly, in my opinion, suffice to show that if the claim succeeded he would incur a liability as a joint tortfeasor to contribute to the damages awarded by the foreign court.
62. This point is of direct relevance in the present case. In the New York proceedings, which I must analyse more fully in a moment, several claims are made but most of them are based upon the allegation that Mr Donohue, Mr Atkins, Mr Rossi and Mr Stinson conspired together fraudulently to extract in various ways substantial sums of money from the Armco group of companies. If the allegations can be made good, the liability of the conspirators would be a joint and several liability. There are substantial issues as to which of the claims fall within the language of the exclusive jurisdiction clause but I think it is clear that some of them do. Of the four alleged conspirators only Mr Donohue and Mr Atkins are contractually entitled to the benefit of the exclusive jurisdiction clause. Mr Atkins has settled with Armco, so it was Mr Donohue alone who commenced an action in this country for an injunction enforcing the clause.
If Mr Donohue is entitled to an injunction enforcing the clause he is entitled, in my opinion, to an injunction that bars the continuance of the claims in question not only against himself but also against Mr Rossi and Mr Stinson with whom he is jointly and severally liable
. If claims against Mr Donohue are within the clause, then so too are the corresponding claims against Mr Rossi and Mr Stinson. Mr Rossi and Mr Stinson are not contractually entitled to enforce the clause, but Mr Donohue is, in my opinion, entitled to ask the court to enforce it by restraining the prosecution in New York of all claims within its scope in respect of which Mr Donohue would be jointly and severally liable.
[emphasis added]
43 The logic of Lord Scott's reasoning is, with respect, persuasive. If a party to an arbitration agreement which is wide enough to cover a tort that arose "out of or in connection with" the agreement and was not limited to a claim made solely against a party to the agreement, then, provided the subject matter of the foreign proceedings does arise out of or in connection with the agreement and the party has a sufficient interest in those proceedings, such as joint liability for damages, the ends of justice are,
prima facie , best served by confining the litigation to one forum; the forum the parties to the arbitration agreement have chosen as the place to resolve their disputes.
44
Clearlake was a case brought before the High Court in England seeking an anti-suit injunction to restrain proceedings in Singapore which raised various tortious misrepresentation claims against two parties, Clearlake and Gunvor. The former was a party to a charterparty containing an arbitration clause but the latter was not. Following the grant of an
ex
parte anti-suit injunction the claimant sought to separate the claims so that a claim in contract was brought only against Clearlake with the claim in tort being brought only against Gunvor (see
Clearlake at [16]).
45 Having reviewed the authorities, including
Donohue , the Judge, Andrew Burrows
QC , concluded in [23] as follows:
23. In principle, and consistently with what Lord Scott and Laurence Rabinowitz QC
[28]Cavendish Square Holding BV v Joseph Ghossoub [2017] EWHC 2401 (Comm)have said and with the other authorities listed in paragraph 20 above, I would express the correct approach to this question (of whether the contracting party (B) can enforce against the other contracting party (A) an exclusive jurisdiction clause, by an anti-suit injunction, so as to prevent tort proceedings by the other contracting party (A) against a third party (C)) in the following way:
(i) It is a matter for the interpretation of the jurisdiction clause whether the clause extends to cover the tort proceedings against the third party [...]
(ii)
If, as a matter of interpretation, the jurisdiction clause does extend to cover the tort proceedings against the third party,
the contractual basis for an anti-suit injunction applies so that, as regards an application by the contracting party (B), the injunction will be granted unless there are strong reasons not to do so
.
(iii) Applying privity of contract, only the contracting party (B) and not the third party (C) can enforce the jurisdiction clause (against A) by an anti-suit injunction on the contractual basis (unless an exception to privity of contract applies).
But the jurisdiction clause may be a relevant factor in granting the third party (C) an anti-suit injunction on the alternative basis that the foreign proceedings are vexatious or oppressive.
(It is also presumably possible in certain circumstances that the jurisdiction clause, even though not contractually enforceable by the contracting party (B) in favour of the third party (C), may be a relevant factor in granting the contracting party (B) an anti-suit injunction against the other contracting party (A) on the basis that the foreign proceedings are vexatious or oppressive.)
[emphasis added]
46 In [24] of
Clearlake the Judge continued:
24. In expressing the correct approach in the way I have just done, I accept that Laurence Rabinowitz QC in the
Ghossoub case was correct that, absent express words as to the jurisdiction clause extending to claims against non-parties, the starting point in interpreting a jurisdiction clause (covering, let us say, 'all disputes arising out of the contract') will be that only the parties to the contract are covered.
But I also agree
with Lord Scott in the Donohue case that, where one has an alleged joint tort committed in relation to a contract by a contracting party and a non-contracting party, the objective interpretation of the jurisdiction clause (covering all disputes 'arising out of the contract') will tend to include a tort claim against the non-party because this will help to prevent forum-fragmentation on essentially the same issues. Such fragmentation is contrary to what the parties are likely to have objectively intended. Ultimately there may be no real conflict between the speech of Lord Scott and the judgment of Laurence Rabinowitz QC because the resolution of the issue turns on the interpretation of the particular contract in the light of the particular facts.
[emphasis added]
47 I agree that avoidance of forum fragmentation is a relevant consideration underlying Lord Scott's reasoning.
48 In
Hai Jiang at [81], Quentin Loh J said this about
Clearlake :
The English Court in
Clearlake Shipping ([64]
supra ) pushed the envelope further by taking into consideration what the court viewed as deliberate and unacceptable forum fragmentation in bringing separate claims in contract and tort in different jurisdictions. I do not need to decide on this point but I will say that it echoes the bold approach of our Court of Appeal in
Tomolugen ([30] supra) and can be well justified in some circumstances under the rubric as being required by the ends of justice.
49 Finally, in
Andaman at [75] Loh J said this:
Where substantially the same claims are pursued against related defendants, the ends of justice are, as a general rule, best served by a single composite trial within which all the claims can be determined: see, eg,
Donohue v Armco Inc & Others [2002] 1 All ER 749; Halsbury's at para 75.135; Fentiman at para 16.46.
50 For my part, I find the reasoning in these citations compelling. In so far as an anti-suit injunction is sought by a party to an arbitration agreement to restrain foreign tort proceedings not only against itself but also against other parties to those proceedings, the position is as follows:
(a) The relevant arbitration clause must be interpreted to determine:
(i) whether it extends to cover tort disputes as well as contractual disputes; and
(ii) whether it extends to tort claims against non-parties.
(b) If it does, the court must decide whether bringing the tort claim against the party is a breach of the arbitration clause.
(c) If it is,
prima facie the party is entitled to an anti-suit injunction in its favour.
(d) If the party has a sufficient interest in the tort claim such as a liability for damages, it is also
prima facie entitled to an anti-suit injunction in its favour to restrain the continuation of the claim as against the non-party.
(e) If it does not, then it is open to the non-party to seek a non-contractual anti-suit injunction on the basis that the foreign proceedings are vexatious or oppressive.
The Proper Law of the Arbitration Agreement
51 It was common ground that the doctrines of separability and kompetenz-kompetenz apply both under Singapore and Korean law. Hence the agreement to arbitrate in the various agreements is separate from the main agreement in which it is contained. As a result, the proper law of the arbitration agreement has to be determined separately from that of the main agreement and the arbitration agreement can survive the termination or invalidity of the main agreement. Equally, it is within the power of the arbitral tribunal to determine whether it has jurisdiction to adjudicate over the dispute.
52 Both parties invited me to apply Singapore law to determine the law that governs the arbitration clauses in this case. There is a three-stage test which was set out in [62] of the judgment of Judith Prakash JCA in the Court of Appeal in
Anupam Mittal v Westbridge Ventures II Investment Holdings [2023] 1 SLR 349 ("
Anupa
m Mittal "):
[29]62 The three-stage test to determine the proper law of an arbitration agreement was laid down in
BCY v BCZ [2017] 3 SLR 357 ("
BCY ") and involves considering at:
(a) Stage 1: Whether parties expressly chose the proper law of the arbitration agreement.
(b) Stage 2: In the absence of an express choice, whether parties made an implied choice of the proper law to govern the arbitration agreement, with the starting point for determining the implied choice of law being the law of the contract.
(c) Stage 3: If neither an express choice nor an implied choice can be discerned, which is the system of law with which the arbitration agreement has its closest and most real connection.
53 So far as concerns the second stage, in [67] of
Anupam Mittal , the Court noted that the general rule was that the choice of law to govern the main arbitration will lead to a conclusion that the same law was intended to govern the arbitration agreement (applying
Sulam
érica Cia National de Seguros SA and Others v Enesa Engelharia SA and others [2013] 1 WLR 102) ("
Sulam
érica ").
54 However, this rule can be displaced by the facts of the case particularly by considering how the effectiveness of the arbitration agreement will be affected by that choice of law (
Anupam Mittal at [68]). In
Sulam
érica, the main agreement was governed by Brazilian law but the arbitration agreement provided for arbitration in London. Under Brazilian law there were fundamental difficulties in enforcing any award which led the Court to conclude that it could not have been the intention of the parties to have Brazilian law govern the arbitration agreement. In
BCY v BCZ [2017] 3 SLR 357 the Court emphasised that the governing law of the main contract "should only be displaced if the consequences of choosing it as the governing law of the arbitration agreement would negate the arbitration agreement even though the parties have themselves evinced a clear intention to be bound to arbitrate their disputes" (see also
Anupam
Mittal at [69]).
Public Policy and Arbitrability
55 The Court of Appeal in
Anupam
Mittal considered the effect of public policy on the ability to arbitrate, drawing, in [46], upon one of its previous decisions:
46 The relationship between arbitrability and public policy was extensively considered by this court in
Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals
[2016] 1 SLR 373 ("
Tomolugen ") with emphasis on s 11 of the IAA. We can do no better than quote the following passages from
Tomolugen :
The concept of arbitrability
71. We turn now to the question of arbitrability. The absence of arbitrability has come to be associated with that class of disputes which are thought to be incapable of settlement by arbitration. The concept of arbitrability has a reasonably solid core. It covers matters which 'so pervasively involve "public" rights and concerns, or interests of third parties, which are the subjects of uniquely governmental authority, that agreements to resolve... disputes [over such matters] by "private" arbitration should not be given effect': Gary Born ([33]
supra ) at p 945. However, the outer limits of its sphere of application are less clear. Lord Mustill and Stewart Boyd QC, for instance, suggest that '[i]t would be wrong... to draw ... any general rule that criminal, admiralty, family or company matters cannot be referred to arbitration': Michael J Mustill & Stewart C Boyd, The Law and Practice of Commercial Arbitration in England (Butterworths, 2nd Ed, 1999) at pp 149-150.
...
75. The concept of arbitrability finds legislative expression in s 11 of the IAA, which reads as follows:
Public policy and arbitrability
11.-(1) Any dispute which the parties have agreed to submit to arbitration under an arbitration agreement may be determined by arbitration unless it is contrary to public policy to do so.
(2) The fact that any written law confers jurisdiction in respect of any matter on any court of law but does not refer to the determination of that matter by arbitration shall not, of itself, indicate that a dispute about that matter is not capable of determination by arbitration.
...
It is evident from this that the essential criterion of non-arbitrability is whether the subject matter of the dispute is of such a nature as to make it contrary to public policy for that dispute to be resolved by arbitration. Beyond this, the scope and extent of the concept of arbitrability has been left undefined, as a consequence of which, it falls to the courts to trace its proper contours (see the 1993 Report on Review of Arbitration Laws ([65]
supra ) at paras 26-28;
Larsen Oil v Petroprod at [24]).
76.
In our judgment, the effect of s 11 of the IAA is that there will ordinarily be a presumption of arbitrability so long as a dispute falls within the scope of an arbitration clause. This presumption may be rebutted by showing that (
Larsen Oil v Petroprod at [44]):
(a)
Parliament intended to preclude a particular type of dispute from being arbitrated (as evidenced by either the text or the legislative history of the statute in question); or
(b) it would be contrary to the public policy considerations involved in that type of dispute to permit it to be resolved by arbitration.
[emphasis added in underline]
56 The Court of Appeal went on to emphasise that the essential criterion of non-arbitrability was "whether the subject matter of the dispute is of such a nature as to make it
contrary to public policy for that dispute to be resolved by arbitration" (see
Anupam Mittal at [47]) [emphasis in original].
57 Finally, in [55] of
Anupam Mittal the Court of Appeal expressed its view that consideration must be given to the question of whether the subject matter of the dispute was non-arbitrable either under the law of Singapore or of the foreign state in question.
58 There are a number of types of disputes which are generally recognised as being non-arbitrable: criminal, admiralty, family or company matters are examples given in the quotation in
Anupam Mittal (see above at [55]). But what has to be emphasised is that it is first necessary to identify the subject matter of the dispute and then to consider whether or not that subject matter is of a nature that is non-arbitrable, rather than considering the impact which aspects of public policy (of any State) may have on the outcome of a properly founded arbitration dispute. There is a necessary and proper distinction between the subject matter of a dispute and the grounds relied upon for resolving that dispute.
The Issues
59 With that background I can turn to the issues that arise for determination in this application.
The Korean CA Proceedings
60 As regarding the Korean CA Proceedings, four issues arise for determination:
(a) What is the proper law of the CA Arbitration Agreement? ("Issue 1")
(b) Is the subject matter of the Korean CA Proceedings non-arbitrable as being contrary to public policy under Korean law? ("Issue 2")
(c) If it is arbitrable, what is the effect of Article 9(1) of the Korean Arbitration Act ("KAA")? ("Issue 3")
(d) Finally, if the Court has a discretion to grant the anti-suit injunction, how should it exercise that discretion? ("Issue 4")
The Korean Compensation Proceedings
61 Concerning the Korean Compensation Proceedings, seven issues arise:
(a) What is the nature of the Korean Compensation Proceedings? ("Issue 5")
(b) In what circumstances and on what basis does the law of Korea permit tort claims to be determined in arbitration proceedings? ("Issue 6")
(c) The
Mozambique judgment ("Issue 7")
(d) What are "the matter or matters" in respect of which the Korean Compensation Proceedings are brought? ("Issue 8")
(e) Does that matter or do those matters fall within the scope of the arbitration agreement on its true construction such that there is a
prima
facie breach of the JVA warranting an anti-suit injunction in favour of GGS? ("Issue 9")
(f) Is GGS entitled to an anti-suit injunction to prevent the continuation of the tort claim against the Directors? ("Issue 10")
(g) Are the Directors themselves entitled to an anti-suit injunction? ("Issue 11")
The Korean CA Proceedings
Issue 1: What is the proper law of the CA Arbitration Agreement?
62 Applying the three-stage test in
Anupam Mittal , the parties are agreed that there is no express choice of proper law of the CA Arbitration Agreement in the main agreement of the CA (the "CA Main Agreement"). The fact that Korean law is expressly chosen as the proper law of the CA Main Agreement is not of itself an express choice for the purposes of the first stage. It is however a strong pointer of an implied choice for the second phase.
63 Subject to one point, the parties were agreed that there was nothing to displace this starting point. GGK however contended that if the effect of Korean law was that the subject matter of the Korean CA Proceedings was non-arbitrable, this would negate the CA Arbitration Agreement even though the parties themselves had shown a clear intention to be bound to arbitrate their disputes (see
Anupam Mittal at [69]).
64 This is a complex question as is illustrated in the discussion at [71]-[74] of
Anupam Mittal of the distinction between the facts of that case and those in
BNA v BNB
and another [2020] 1 SLR 456. Should it be necessary I shall address this point after resolving Issue 2.
Issue 2: Is the subject matter of the Korean CA Proceedings non-arbitrable as being contrary to public policy under Korean law?
65 Asiana's contention that the subject matter of the Korean CA Proceedings is non-arbitrable as being contrary to Korean Law has its foundation in the prosecution and conviction of Chairman Park. By the Criminal Decision issued on 17 August 2022 Chairman Park was sentenced to 10 years' imprisonment for embezzlement and breach of trust under the Korean Act on the Aggravated Punishment of Specific Economic Crimes (the "SEC Act").
[30]66 The Sentencing Reasons (see above at [22]) emphasised the pivotal role that large scale businesses play in the Korean economy and the need for strict controls over ethical business practices and to the fact that the damage caused by the defendants had been translated into damage to the nation as a whole.
[31]This, in particular, had led to a tarnishing of Asiana's corporate image which had an adverse effect on the national economy.
[32]67 It was as a result of the investigation into Chairman Park's conduct and his indictment that the Korean CA Proceedings were commenced on 24 January 2022 seeking a declaration that the CA was null and void.
[33]Gahap 51122 dated 14 March 2022, ABOD Vol 5 Tab 6 (1st Affidavit of Kim Se Joong dated 14 July 2023) at p 71.Reliance was placed upon the indictment of Chairman Park for his breach of trust in coupling Asiana's catering business in the CA with the BWA in violation of the SEC Act. As a result, it was asserted that the CA was a contract contrary to good morals and other social order which was null and void pursuant to Article 103 of the Korean Civil Act,
[34]which provides that:
"A juristic act which has for its object such matters as are contrary to good morals and other social order shall be null and void."
68
Prima facie , a dispute as to whether an agreement, such as the CA, is void in circumstances where there is an arbitration agreement is a matter to be decided by the Tribunal in a properly constituted arbitration. It is not a matter which falls to be decided, save with the consent of the parties, in a national court and hence it would be a breach of the arbitration proceedings to bring proceedings in a national court. Asiana did not dispute this as a matter of principle but contended that a dispute based on Article 103 constituted an exception on the basis that the dispute in the Korean CA Proceedings was non-arbitrable under Korean law. Hence, since the dispute was non-arbitrable, there was no breach of the CA Arbitration Agreement in commencing proceedings in Korea.
[35]69 It was not suggested that the dispute based on Article 103 fell into one of the recognised categories of non-arbitrable matters (see [55] above) nor was it suggested that there was any statutory provision under Korean law which expressly made disputes under Article 103 non-arbitrable. I was referred to no case where a court in Korea had been asked to address the question.
70 It was pointed out by counsel for the Applicants that at the hearing of the setting aside proceedings, OS 11 (see above at [15]), Asiana contended that the CA was valid but, additionally, that if the interpretation placed on the CA by GGK was correct, this would result in the agreement being void under either Articles 103 or 107 of the Korean Civil Code (see above at [16] and [17]). It was not there suggested by Asiana that the Tribunal would have been unable to resolve a dispute under Article 103.
71 At the hearing, I drew the attention of the parties to a recent decision of this Court in
C
NA v CNB and another and other matters [2023] SGHC(I) 6 at [170] where an issue arose as to whether an agreement was void under Article 103 or 107 of the Korean Civil Code. In that case the Court had the assistance of two experts in Korean law, neither of whom suggested that a dispute under Article 103 was non-arbitrable.
72 This of course is not conclusive. The point which has been directly raised by Asiana in these proceedings may nonetheless be a good one which has escaped the notice of practitioners and some experts over the years.
73 Asiana relies on the expert report of Professor Lee Kitaik
[36]("Professor Lee") in support of its assertion of non-arbitrability under Korean law. Professor Lee is an eminent jurist who graduated from the Seoul National University College of Law in February 1982 and completed his studies at the Judicial Research and Training Institute, Supreme Court of Korea. He then became a Judge in Korea culminating in being appointed as a Supreme Court Justice in 2015. He retired from the Supreme Court in 2021 and in 2022 became an Endowed-Chair Professor at the Soang University School of Law. Over the years he has authored a number of academic papers covering various different subject matters.
[37]74 In his expert report Professor Lee states his conclusion on the question of arbitrability:
[38]12. The purpose behind Article 103 of the Korean Civil Code is to prevent the legal order from becoming an accomplice to illegal acts by absolutely denying the validity of legal acts contrary to good morals and other social order. If the main contract, the CA, is absolutely null and void
ab initio for violation of Article 103 of the Korean Civil Code, an exception to the doctrine of separability applies, and the arbitration clause in the CA should also be viewed as null and void
ab initio .
75 In his report, Professor Lee further identifies the subject matter of the Korean CA Proceedings as being "confirmation of the CA's nullity".
[39]He draws attention to Articles 2(1) and 5(2)(a) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards concluded on 10th June 1958 (the "New York Convention") (which is binding in Korea) which states that recognition and enforcement of an arbitral award that is not capable of settlement by arbitration under the law of the country may be refused.
[40]He then continues to consider the Arbitration Act of Korea before turning to Article 103 where he states in paragraph 26:
[41]26. Article 103 of the Korean Civil Code states that "a juristic act which has for its object such matters as are contrary to good morals and other social order shall be null and void." The term "good morals in Article 103 refers to the society's general and sound moral sense; and the term "social order" in Article 103 refers to the nation's or the society's public order or general interest. Article 103 of the Korean Civil Code is regarded as an overarching principle in the sphere of Korean civil law and order.
[footnotes omitted]
76 He goes on to give a number of reasons why the authority to make the decision as to whether a juristic act has gone beyond the bounds of the principle of private autonomy should be deemed to rest with the Korean court.
[42]In particular, at paragraph 32, he says this:
32. Arbitrators are not judges but private persons. Arbitral proceedings proceed in accordance with agreement between parties and arbitrators or among arbitrators. There is a great deal of difference between litigation and arbitration. In arbitral proceedings, there is no guarantee that an arbitral tribunal would reach the same conclusion about what constitutes Korea's good morals and other social order as a judge would in judicial court. For example, inconsistencies may arise if an arbitral tribunal upholds validity of a juristic act under Article 103 of the Korean Civil Code that would otherwise be, in an objective view, nullified by the same provision. The arbitral tribunal's inconsistent decision then causes a juristic act that is contrary to good morals and other social order to be valid and effective.
77 In paragraphs 36 to 45 he considers the effect a finding under Korean law on the "Arbitrability of a Juristic Act [the CA] Executed through a Breach of trust under the Korean Criminal Code"
[43]and opines that "Korean law has consistently recognized an act of breach of trust toward a company as a grave and serious act contrary to good morals and other social order".
[44]78 He concludes in paragraphs 44 and 45:
[45]44. As explained above, an arbitrable "private-law dispute" should not simply be construed as an opposite concept of "public-law dispute." Rather, an arbitrable "private-law dispute" is "a dispute whose nature permits parties to agree to resolve it through arbitration under the principle of private autonomy." If a dispute over validity of a contract executed as a by-product of a serious crime like an act of breach of trust is referred to arbitration, an arbitral tribunal consisting of private persons would have to decide the preceding issue of whether there is in fact a crime. Thus, such dispute may not be considered as a typical private-law dispute where parties may freely agree to resolution by arbitration under the principle of private autonomy.
45. In light of the above, one may not reach a dispositive conclusion that the dispute in the Korean CA Proceedings is arbitrable under Korean law. At a minimum, given absence of clear case law on this issue, Asiana's right to trial in Korean courts can easily be discerned.
79 Professor Lee then turns to address the question of whether the arbitration clause in the CA is itself null and void notwithstanding the doctrine of separability. He accepts that the doctrine of separability exists under Korean law but contends that it does not apply indiscriminately and draws attention to what he refers to as a "theory" in paragraph 49:
[46]49. There exists a theory in Korean jurisprudence that when a main contract is null and void because it contravenes good morals and other social order under Article 103 of the Korean Civil Code, validity of an arbitration agreement within the main contract cannot be recognized. According to the theory, that holds true even if the arbitration agreement itself does not present grounds for nullification-a reason being that a valid legal obligation cannot be created from illegality. In my opinion, the theory is sound and persuasive because the purpose of Article 103 of the Korean Civil Code is to preclude the legal order from becoming complicit in illegality by flatly denying and countermanding validity of any juristic act that is contrary to good morals and other social order, and because according such tortious act even partial validity would abolish the entire purpose of Article 103 of the Korean Civil Code.
[footnote omitted]
80 The paper referred to in support of this theory is an article by Professor Su-mi Kang ("Professor Kang"), Professor of Law at the College of Law of Yonsei University, published in the Journal of Law, entitled "The Validity of Arbitration Agreement in cases where the Validity of the Main Contract is Contested - with particular focus on the Doctrine of Separability".
[47]81 This is a long, detailed paper but the essence of the reasoning relevant for present purposes is in the following section:
[48]D. With respect to the reasons for which the validity of the main contract is contested
The separability of an arbitration agreement becomes an issue in a dispute over validity of the main contract containing an arbitration clause when there is a reason for invalidation or cancellation of the main contract, e.g., where it is asserted that a contract containing an arbitration clause was executed upon fraud or coercion, or where there is an issue of error or incapacity.
However, when the validity of a contract containing an arbitration clause is contested, determination of the validity of the arbitration agreement is subject to certain restrictions.
If a contract that includes an arbitration clause constitutes a
juristic act contrary to good morals or other social order or an unfair juristic act, the arbitration agreement should also be deemed invalid. In such cases, although there is no ground for invalidation of such arbitration agreement, the validity of the arbitration agreement cannot be accepted because arbitration cannot create a valid legal obligation based on an illegal juristic act. However, this issue is more likely to be discussed in the perspective of arbitrability or public policies rather than separability.
In the event that one party claims invalidity of a main contract and such claim is not contested by an opposing party, or in the event that one party claims that there are grounds for termination of a main contract and such claim is not contested by an opposing party, or in the event that both parties agree to terminate a main contract, these scenarios could realistically undermine the subject matter of an arbitral award. In that case, an arbitrator can simply acknowledge his or her lack of jurisdiction over the claim.
However, if there is a dispute between the parties regarding the validity of a main contract, an arbitrator's jurisdiction to rule on that of validity could be deemed as a jurisdictional issue. If parties had agreed at the time of entering into an arbitration agreement that an arbitrator would have the power to decide on this issue, then the arbitrator should have the power to decide on validity of the main contract on the basis of this agreement. In the absence of such agreement, the issue must be resolved by contract interpretation. Since the arbitration agreement by its nature has an independent purpose and content separate from the main contract, it is reasonable to assume that disputes over the validity of the main contract also fall within the subject matter of arbitration. To the extent the validity of the main contract is contested, it can be presumed that the arbitration agreement is still valid under the main contract.
[footnotes omitted; emphasis added]
82 Professor Lee states that there is no Korean case law either from the Supreme Court or from the lower courts which address this question and expresses his own conclusion in paragraph 52:
[49]52. In this case, Asiana claims that the CA was executed through Park Sam-Koo et al.'s act of breach of trust and active participation in the tortious act by the Gate Group, and thus that the CA is null and void under Article 103 of the Korean Civil Code. Against such backdrop, I find it difficult to construe that the arbitration clause in the CA was intended to be applicable even in these circumstances. Likewise, it is my view that the doctrine of separability would not cover the arbitration clause of the CA.
83 The Applicants have retained Professor Hi-Taek Shin ("Professor Shin") as an expert in Korean law to assist the court. Professor Shin is also an eminent Jurist. He has an LL.B and an LL.M degree from Seoul National University and a J.S.D. from Yale Law School. He also trained at the Judicial Research and Training Institute, Supreme Court of Korea. He practiced at a leading Korean law firm for 27 years until 2007 when he became a Professor of Law at Seoul National University School of Law as well as being the director of its Centre for International Economic and Business Law. He is currently a full-time arbitrator. He was a member of the taskforce which proposed amendments to the Korean Arbitration Act in 2016 and wrote the chapter on Korean arbitration law in
The UNICITRAL Model Law and Asian Arbitration
Laws , G. Bell (ed.) (Cambridge University Press 2018).
[50]84 Professor Shin reaches the opposite conclusion to that expressed by Professor Lee and expresses this in paragraph 24:
[51]24. Asiana's claim and the dispute in the Korean CA Proceedings come within the scope of the arbitration agreement in the CA. Under Korean law which embraces the principle of separability of an arbitration agreement, the arbitration agreement contained in the CA is not affected by the alleged invalidity of the CA. Thus, Asiana's claim and the dispute in the Korean CA Proceedings which arose out of or in connection with the CA must be resolved by arbitration in accordance with the arbitration agreement in the CA unless the court finds the arbitration agreement itself null and void, inoperative or incapable of being performed. I am of the opinion that there exists no such ground to view the arbitration agreement in the CA null and void, inoperative or incapable of being performed. Furthermore, the dispute between Asiana and GGK concerns the private law consequence of the CA, a commercial agreement, entered into by Asiana allegedly in breach of trust by its representatives with the alleged involvement of GGK. As such, the dispute squarely falls under the category of typical arbitrable disputes in private law under the Korean Arbitration Act and is capable of being resolved by arbitration in accordance with the arbitration agreement in the CA.
85 Having confirmed that the principles of separability and kompetenz-kompetenz apply in Korea,
[52]Professor Shin draws attention to Clause 23 of the CA which expressly provides that if any provision of the agreement is invalid or unenforceable the other provisions shall remain in force as serving to emphasise the intention of the parties with regard to separability.
[53]86 He then expresses his opinion with regard to the effect of the doctrine of separability in this case in paragraph 63:
[54]63. As discussed above, under the separability doctrine embedded in the KAA and accepted by Korean court precedents, the validity of an arbitration clause cannot be denied on the grounds of a challenge to the validity of the main contract. That is unless there are special circumstances to find that the arbitration clause is invalid in itself, the validity of the arbitration clause cannot be denied just because the validity of the main contract is being challenged. Asiana simply asserts that the CA is invalid under Article 103 of the Civil Code, and accordingly the arbitration agreement is also invalid. However, Asiana has not presented a rational argument how an agreement between the parties to resolve disputes by arbitration could be contrary to "good morals and other social order" under Article 103 of the Civil Code. As quoted in the paragraph 54 above, Article 103 of the Civil Code provides that legal acts "
which has for its object such matters as are contrary to good morals and other social order shall be null and void ." Article 1 of the KAA provides that the purpose of this law is "to ensure the appropriate, fair and prompt settlement of disputes in private law by arbitration". Accordingly, an arbitration agreement whose objective is to resolve the disputes between the parties by arbitration is a means to fulfil such public policy of fair and prompt settlement of disputes in private law expressed in the KAA. Unless there is a special circumstance such as fraudulent inducement to agree to an arbitration or an arbitration clause that is extremely unfair to one party, it is improbable that an arbitration agreement itself would be determined invalid on the ground of Article 103 of Civil Code. I do not find any such circumstance making the arbitration agreement in the CA invalid. Designating Singapore as the place of arbitration is not extremely unfair to Asiana to be viewed as "
contrary to good morals and other social order " of Korea. Korean parties commonly agree to arbitrate their disputes in Singapore under the rules of the ICC or SIAC.
[emphasis in original]
87 The question that falls to be answered in his opinion is thus whether the agreement to arbitrate was separate from the question of whether the CA Main Agreement was reached in circumstances that render it contrary to Article 103.
88 Professor Shin considers the opinion of Professor Kang,
[55]and the kernel of his reasoning in rebuttal is found in the following extract from paragraph 76:
The flaw in the reasoning of Su Mi Kang is the statement that "
it cannot create a valid legal obligation through arbitration from an unlawful act ". The principle of separability establishes the obligation to arbitrate is not created from the main contract but exists independently. As stated earlier, the principle of separability recognizes that an arbitration agreement, by its nature and function, exists on the premise that disputes may arise over the validity of the main contract containing an arbitration clause. Accepting the opposite argument would invalidate the arbitration agreement whenever the main contract is alleged to be invalid (not just on the grounds of illegality or public policy). Su Mi Kang's opinion is also against the explicit text of Article 17(1) of the KAA, which provides that "
an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other clauses of the contract ". This provision does not distinguish according to the basis for alleged invalidity. The conclusion is that the principle of separability applies regardless of the basis for pleading invalidity: only if the basis goes to the arbitration agreement specifically will the arbitration agreement be determined invalid.
[emphasis in original]
89 Drawing all this together, the experts are agreed that the principles of separability and kompetenz-kompetenz apply. They are agreed that the invalidity of all or part of the CA Main Agreement will not of itself serve to invalidate the CA Arbitration agreement. They are agreed that a defence based, for example, on fraud/duress (Article 110 of the Korean Civil Code), would not serve to invalidate the CA Arbitration Agreement.
[56]90 It is not in dispute that the subject matter of the Korean CA Proceedings is whether and to what extent the CA is void. Professor Lee expressed it as being "confirmation of the CA's nullity".
[57]This is subject matter which is
prima facie suitable for determination by way of arbitration under the agreement. More specifically, it is not in dispute that the question of whether the CA Main Agreement is void would be susceptible to resolution by way of arbitration if the CA Arbitration Agreement was valid.
91 The sole question therefore is whether, in the circumstances of this case, the dispute is non-arbitrable so that the CA Arbitration Agreement cannot be invoked.
92 It is accepted that the subject matter does not fall within any of the accepted categories of non-arbitrable agreements and that there is no express provision in Korean law which creates an exception to arbitrability when Article 103 is invoked. Further there is no case law which suggests that there is or even might be such an exception when it is accepted that there is no such exception in the case of fraud.
93 The subject matter of the Korean CA Proceedings is, as indicated above, the validity of the CA Main Agreement. The grounds on which it is alleged to be void is that it was entered into in circumstances which are contrary to Article 103 because of the actions of Chairman Park.
94 However, the parties entered into the CA Arbitration Agreement because they wished relevant disputes between them to be resolved by arbitration, not in the courts. The subject matter of the Korean CA Proceedings is a relevant dispute yet it is suggested that a subsequent event, the indictment and conviction of Chairman Park, can, of itself, serve to negate that wish.
95 In my judgment that cannot be the right way to approach the answer to the question. The actions of Chairman Park have been held to constitute a criminal offence. The Applicants played no part in that trial and, in any subsequent civil proceedings, whether in the Korean Courts or in an arbitration, Asiana would have to prove their case - that the CA was entered into in breach of Article 103.
96 But the scope of Asiana's objection cannot be limited to a case where the history subsequent to the making of the agreement presents a potentially strong case that Article 103 might have been breached. If there is a principle that disputes over validity based upon Article 103 are non-arbitrable, it must apply to all cases where Article 103 is invoked. Hence the Tribunal would not have the authority to decide whether it was reasonable to invoke Article 103, far less to decide whether that Article was breached.
97 I consider that Professor Shin was correct when he said in paragraph 63 of his report that Asiana has not presented a rational argument as to how an agreement between the parties to resolve disputes by arbitration could be contrary to Article 103. There is no suggestion that the agreement to arbitrate was induced by any conduct that was contrary to "good morals and other social order". There were rational reasons for agreeing to arbitrate which are not said to be tainted by Chairman Park's conduct.
98 In my judgment it is necessary to draw a clear distinction between the grounds on which it is said that the subject matter of the CA Main Agreement is void and the grounds on which it is said that the CA Arbitration Agreement is void. It does not follow from the fact that Article 103 is being invoked to invalidate the CA Main Agreement, that the CA Arbitration Agreement is also rendered invalid. In any given case there might be grounds for saying that the CA Arbitration Agreement itself was tainted but that is a far cry from the submission made to me that there was a principle of Korean law that the doctrine of separability does not apply when a main contract is allegedly null and void because it contravenes Article 103.
[58]99 As I see matters, were there to be a contention that a particular arbitration clause had been entered into in a manner that renders it void, this would be a matter for a properly constituted tribunal to decide, it would not serve to oust their jurisdiction.
100 For all these reasons I regret that I am unpersuaded by the reasoning of Professor Lee, based upon Professor Kang's paper. I cannot help but feel that had Professor Kang's views had any traction, they would have been the subject of subsequent academic papers or raised by way of argument in litigation in the intervening 15 years since it was published. I consider, with respect, that Professor Lee in paragraph 52 of his report was focussing too heavily on the very serious crimes of which Chairman Park was convicted and not sufficiently upon the generality of the effect that his reasoning would have had on an agreement to arbitrate.
101 In circumstances where there is no statutory provision that disputes under Article 103 are non-arbitrable under Korean law, the better view is that the principle of separability and kompetenz-kompetenz apply even in cases where Article 103 is raised. GGK have therefore raised the necessary
prima facie case in this regard.
102 In these circumstances it is unnecessary to consider the alternative argument raised by GGK that if the Article 103 argument was a good one, then Singapore law became the proper law of the CA Arbitration Agreement so as to give effect to the parties' clear desire to arbitrate their disputes (see [64] above).
Issue 3: What is the effect of Article 9(1) of the Korean Arbitration Act 2016 ("KAA")?
103 Asiana contends that even if the dispute raised in the Korean CA Proceedings is arbitrable, nonetheless the bringing of those proceedings does not constitute a breach of the CA Arbitration Agreement because Korean law allows them to be brought pursuant to Article 9(1) of the KAA.
104 Article 9(1) of the KAA is the provision which implements in Korea Article II(3) of the New York Convention and Article 8(1) of the UNCITRAL Model Law on International Commercial Arbitration (the "Model Law"). It provides:
A court before which an action is brought in a matter which is the subject of an arbitration agreement shall dismiss the action when the defendant raises as a defense the existence of an arbitration agreement: provided that this shall not apply in cases where it finds that such arbitration agreement is null and void, inoperative or incapable of being performed.
105 And Article 9(3) of the KAA goes on to provide:
Where an action referred to in paragraph (1) has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made while the issue is pending before the court.
106 This was not a point that was canvassed directly in the parties' written submissions. It is referred to in Asiana's written submissions in relation to delay
[59]and potential injustice to Asiana.
[60]The legal position was however covered in both experts' reports and the argument was raised as a self-standing point by counsel for Asiana in his oral submissions and was responded to by counsel for the Applicants in his reply.
107 Professor Lee considers the effect of these provisions in paragraphs 54 to 56 of his report, wherein he relies on a decision of the Supreme Court of Korea (the "Supreme Court Decision"):
[61]54 Collectively, the above provisions of the KAA imply that when one contracting party files an action claiming nullity of an arbitration agreement and the other contracting party raises a defense of the existence of an arbitration agreement, Korean courts would first deliberate whether the arbitration agreement is null and void, rather than dismissing the action immediately. Case law from the Korean Supreme Court also holds to the same effect: that even in the midst of the arbitral proceedings, a contracting party that claims non-existence or nullity of the arbitration agreement can file an action in court regarding an arbitrable dispute.
|
"We proceed on the premise that
while arbitral proceedings are ongoing, a party that claims non-existence or nullity of an arbitration agreement can still file an action related to subject matters that fall within the scope of the arbitration agreement in court . That said, it also means that an arbitral tribunal may independently commence or continue the arbitral proceedings notwithstanding the legal proceedings at the court."
"Article 6 of the Arbitration Act limits cases and ways in which the court may intervene in the arbitral proceedings to those explicitly listed in the Arbitration Act.
Also, a party that claims non-existence or nullity of an arbitration agreement can still file an action in court even if the arbitral proceedings are ongoing . An arbitral tribunal may commence or continue arbitral proceedings, or render an award, while the legal proceedings in court are ongoing. (Article 9 of the Arbitration Act)" (The Seoul Central District Court Decision 2017KaHap80375) (original first-instance decision of the above Supreme Court Decision) |
55. In other words, the fact that the arbitrability of a dispute is recognized under Korean law does not necessarily exclude the possibility of resolving the dispute by litigation. According to Korean arbitration law, where there is a dispute regarding the nullity or nonexistence of an arbitration agreement, the party claiming the nullity or non-existence of an arbitration agreement may file a separate lawsuit regardless of the arbitration proceeding even if a party initiates arbitration and the arbitration proceeding is ongoing. The Korean law specifically provides for the court to render judgement on the validity of such arbitration agreement.
56. In sum, as long as Asiana claims nullity of not only the CA but also the arbitration agreement in the CA, Korean courts would need to deliberate and render a final decision on the merits, regarding the issue of whether the arbitration clause of the CA is null and void, rather than dismissing the Korean CA Proceedings.
[emphasis in original; footnotes omitted]
108 Professor Shin gives similar evidence in paragraphs 32 to 42 of his report. In paragraph 38 he refers to the same passage in the Supreme Court Decision cited by Professor Lee. It is to be noted that this passage is based on the premise "while arbitral proceedings are pending".
[62]109 He goes on to conclude in paragraph 39 that even if the counterparty were to commence an arbitration whilst the litigation is pending, the KAA does not require the courts to stay the litigation and accepts that this could lead to inconsistent conclusions. He goes on to draw attention to the fact that in the unusual facts of this case the fact that GCK has initiated the Enforcement Proceedings, in which the alleged non-arbitrability of the CA Arbitration Agreement owing to the effect of Article 103 is also raised, the possibility of two inconsistent decisions in the Korean courts also arises.
[63]110 In his oral submissions counsel for Asiana drew upon the Supreme Court Decision cited by Professor Shin to submit that since under Korean law a party claiming nullity of the arbitration agreement may initiate proceedings concurrently with the same issue being raised in an arbitration, it could not be a breach of the CA Arbitration Agreement to do so. The argument made by counsel was as follows:
[64]But my point is this. This is something the Korean Courts deal with and allow parties to do. And if I'm doing something which a Korean Court---or if my clients are doing something the Korean Court allows us to do under the law, it cannot be a breach of an arbitration agreement, or at the very least, that would be a strong reason to deny an anti-suit injunction, because we're just exercising rights and expectations that we have under Korean law in the exact manner that Korean law expects these issues to be decided.
111 Counsel for the Applicants responded by acknowledging that Korean law permitted a party to seek relief in the Korean Courts but contended that this did not mean that Asiana were not in breach of the CA Arbitration Agreement by so doing.
112 Having regard to the way in which the point was developed, rather than dealing with this as a matter of generality I prefer to restrict my observations to the facts of this case. The pertinent facts are that the Korean CA Proceedings were commenced on 24 January 2022 after the Final Award had been made and the application to set it aside had been commenced in the Singapore Court. It was also made after the Enforcement Proceedings were commenced in the Korean Courts on 20 May 2021.
113 Article 9 of the KAA contemplates the commencement of proceedings in the Korean Courts either before or in the course of concurrent arbitration proceedings. This is clear from the wording of Article 9(3) and from the approach of the Korean Supreme Court (see [107] above). It does not apply to the facts of this case where the proceedings were commenced after the arbitration proceedings had been concluded and the Final Award had been made.
114 The purpose underlying Article 9 is to enable a party alleging that an arbitration agreement is void to have that issue determined by the National Court instead of, or as well as, by the Tribunal. It is not to enable a party who did not make that allegation in the arbitration nor seek to raise it before or during the course of the arbitration to do so in the National Court subsequent to the rendering of the Final Award. In these circumstances, I am satisfied that the Applicants are correct in their submission that Article 9 does not absolve Asiana from the possibility of being in breach of the CA Arbitration Agreement in starting the Korean CA Proceedings.
Issue 4: If the Court has a discretion to grant the anti-suit injunction, how should it exercise that discretion?
115 On the basis that the commencement of the Korean CA Proceedings was
prima facie a contractual breach of the CA Arbitration Agreement, the correct approach to considering the exercise of discretion is as set out by Steven Chong JA in
Sun Travels (see above at [31]). In the case of a contractual breach anti-suit relief will ordinarily be granted unless there are strong reasons not to do so and there is thus no need to adduce additional evidence of unconscionable conduct. But relief must be sought without undue delay and without unconscionable conduct on the applicant's part.
116 Here, Asiana assert that the delays that have occurred in the Korean CA Proceedings coupled with the GGK's manner of conducting those proceedings is such that GGK has lost the right to seek anti-suit relief. GGK seeks to counterbalance the effect of any delay by raising the issue of the alleged unconscionable conduct of Asiana in contesting the arbitration proceedings on the basis that the CA was valid and then, having failed, seeking a determination from a different tribunal that the agreement was void. I do not accept this. The conduct of the party in breach cannot serve to justify delay by the complaining party in seeking anti-suit relief. Indeed, where there is alleged unconscionable behaviour of this nature, this would seem to be a spur to seeking relief promptly; it cannot justify delay.
117 This is therefore a straight question of deciding whether any delay as has occurred in this case is such that the court should refuse to exercise its discretion to grant the injunction sought (see [36] above).
118 The procedural timetable for the Korean CA Proceedings is set out in paragraph 42 of Asiana's written submissions:
[65]|
Date |
Event |
|
24.01.2022 |
Asiana's filing of its Complaint |
|
14.03.2022 |
GGK's filing of its Reply |
|
29.12.2022 |
Asiana's filing of its Brief |
|
16.06.2023 |
GGK's filing of its Reply Brief |
|
20.06.2023 |
1st hearing |
|
18.08.2023 |
Asiana's filing of its 2nd Brief |
|
22.08.2023 |
2nd hearing |
|
24.10.2023 |
Intended 3rd hearing date |
119 In the Complaint filed on 24 January 2022, Asiana contested the validity of the CA Main Agreement on the basis that it was contrary to Article 103. It did not raise the issue surrounding the potential invalidity of the CA Arbitration Agreement until the filing of its Brief on 29 December 2022. In its first Reply on 14 March 2022 GGK contended that the proceedings were improper because they were brought in breach of clause 28 of the CA and sought that the proceedings should be terminated under Article 9 of the KAA.
120 On 22 May 2023, GGK requested Asiana to withdraw the proceedings on the basis that they were in breach of the CA Arbitration Agreement. This request was refused on 31 May 2023 and Asiana also refused to attend a meeting of the Joint Steering Committee which is the committee set up under the CA to try to resolve disputes.
[66]121 In its second Reply Brief of 16 June 2023 GGK reiterated its contention that the claim should be dismissed and sought an order that the jurisdictional issue should be decided as a preliminary issue. There followed the first court hearing on 20 June 2023 at which the court acknowledged GGK's position on jurisdiction but allowed Asiana to file a brief on the merits.
122 This application, SIC 14, was then commenced on 28 June 2023.
123 Although there is a delay from January 2022 until June 2023, it can be seen that this was taken up with the exchange of two rounds of Briefs during which Asiana expanded its case as indicated and GGK repeated its objection to the continuation of the proceedings and sought to engage with Asiana to agree their withdrawal. There was only one court hearing during which directions were given.
124 Although there was a second hearing on 22 August 2023 and a third was scheduled for 23 October 2023, the parties were unable to give me any indication as to when the Korean court might reach a decision on the issues.
125 Professor Lee considers the Korean CA Proceedings in paragraphs 67 to 73 of his report.
[67]In paragraph 68 he describes the first pleading date (
ie
, the first hearing) as being the occasion on which the court "directs the parties to state the major points of the complaint and the answer, sets out the contested issues and hears the parties' opinions about matters to be proven".
[68]The court may then designate additional pleading dates for the parties' submission of evidence and examination of evidence. Eventually when the court is satisfied that sufficient pleading has been done it closes the pleading stage and designates a date for pronouncement of the judgment.
126 In paragraph 70 he refers to the second hearing on 22 August 2023 as being the time when Asiana submitted a detailed brief and when GGK announced that it would present detailed arguments to refute Asiana's claims. He concludes "in other words, it can be said that the court is already reviewing the case" and he concludes in paragraph 73 that "the Korean CA Proceedings, in terms of duration and procedure have already progressed to a significant extent."
[69] This judgment text has undergone conversion so that it is mobile and web-friendly. This may have created formatting or alignment issues. Please refer to the PDF copy for a print-friendly version.
